The Santa Cruz County Board of Supervisors on Tuesday unanimously voted to place a half-cent sales tax measure on the November ballot that would fund an array of “safety net” services in the face of looming state and federal cuts.
The board also declared the county to be in a state of “fiscal distress.”
If approved by a simple majority of voters, the measure would generate approximately $27 million annually for five years, and would apply to sales in the unincorporated areas of the county.
The funds would be used for emergency medical and mental health services, food security, housing stability, homelessness response and other safety net services.
Santa Cruz County Executive Officer Nicole Coburn said the impacts of state and federal cuts are already evident.
“Federal reductions are already reaching our local services, and we’re starting to see the impacts,” she said.
Those costs have shifted onto local jurisdictions, with no increase in funding to help pay for them.
The biggest challenge, Coburn said, comes from H.R. 1, also called the One Big Beautiful Bill Act, whose changes have not yet been felt locally.
“This is going to ripple across the entire local safety net,” she said.
This includes impacts on emergency rooms, ambulance and emergency medical services, nutrition services, safety net clinics, mental health services, as well as food security and housing programs.
“We have estimated that potentially there is more than $200 million in potential annual loss to the local provider network, including the county and our community partners,” Coburn said.
County officials say a combination of new federal laws, executive actions and related state budget decisions is expected to place a larger financial burden on counties. State estimates indicate about 1.1 million Californians could lose Medi-Cal coverage, while some independent analyses project the total could approach 3 million by 2028.
The Central California Alliance for Health expects Medi-Cal enrollment to fall by 27% across the five counties it serves, a decline that could ultimately reduce funding for Santa Cruz County’s health care provider network by more than $200 million each year.
Meanwhile, the California State Association of Counties estimates H.R. 1 could cost California counties and county-operated health systems between $6 billion and $9.5 billion annually through reduced federal funding and increased local obligations.
The county estimates these changes will result in more than $150 million in increased costs and reduced revenues for the county and its community partners over the next five years.
While the measure was seen as a sound move by both county staff and the board, two speakers expressed frustration with the tax.
Becky Steinbruner said it will hurt residents whose ongoing financial troubles are a fiscal crisis in themselves.
“This is a regressive tax that will hurt the very people that you’re saying need the help,” she said. “My family needs to live within our means, and I think the county needs to do the same.”
Carol Bjorn agreed.
“We can’t keep implementing a quote-unquote solution that creates the problem that we’re trying to solve,” she said. “Any tax that you’re proposing is creating the problem.”
Supervisor Manu Koenig called the tax measure an “essential action.”
“I don’t think that anyone is thrilled about the idea of paying more taxes at a time when the cost of living is already high,” Koenig said. “At the same time, we all depend on the emergency room to be there. We don’t know if we’re going to need it today or tomorrow or maybe not at all, but we need it to be there.”
Koenig pointed out that the funds brought in by the measure, if passed, will not pay for an expansion of services, but will instead help preserve what is already there.
“This is a moment when the best way to help yourself is in fact to help others,” he said. “Because preserving those emergency services means ultimately ensuring that they’re only being used when they have to be.”
Supervisor Kim De Serpa, who spent her career in the health care field, said the industry is facing a crisis, pointing to the recent loss of 20 providers from Dignity Health and many residents losing their doctors.
“The county is experiencing a crisis, and if there is something we can do to stabilize people that are the most vulnerable in our community, we must do that,” De Serpa said.
Board Chair Monica Martinez said the proposed tax was created in response to actions by the federal administration affecting vulnerable populations and the Affordable Care Act.
“This is an opportunity for our community to step up and say that we support those who are vulnerable in this community. We do not want our safety net to fall apart. We do not want people to fall through the cracks.”
The measure will appear on the ballot only if SB 762 becomes law. The bill, which authorizes the local ballot measure, is supported by numerous local agencies, organizations, cities and health care providers, including the largest union representing county workers.
The Senate approved the bill Monday, and it is now headed to Gov. Gavin Newsom’s desk.
